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The ULIP (Unit Linked Insurance Plan) is one of the excellent investment plans available in the market. Unlike most other investment plans, ULIP plans give you an opportunity of investing in equity and debt funds, further allowing you to gain high ULIP returns while being covered by insurance.

However, before you invest in ULIPs, it is essential that you are well-versed with the standard ULIP charges associated with the plan.

Here are five ULIP charges that you need to know:

1. Premium Allocation

These charges are directly deducted from the premium amounts you pay. The remaining premium amount is utilized for investing in ULIP funds of your choice. As per most ULIP providers, the premium allocation charges include the distributor fees and underwriting charges.

For instance, consider that the premium allocation charges are at 4%. Now, if you are paying a premium amount of INR 50,000 every month, your provider will deduct INR 2000 straightaway and invest the remaining INR 48,000 in your chosen funds.


2. Fund Management Charges

The fund management charges, as the name suggests, are imposed towards managing your funds. Generally, they are charges as a percentage of your assets’ value. As a matter of fact, these charges are higher for equity-oriented funds as that of debt-oriented funds.

For instance, consider that the value of your fund is INR 1 lakh. In that case, you will be paying INR 1350 towards the fund management charges every year.

It is, however, noteworthy that as the value of your asset grows, the fund management charges are bound to increase.


3. Policy Administration Charges

The charges paid towards the administrative expenses are stated under policy administration charges. You pay these charges to your provider for maintaining your ULIP policy. The policy administration charges generally include the cost of paperwork or the cost of your premium due date’s timely reminders.

You are liable to pay these charges every month. Also, depending on your ULIP plan, these charges may remain the same throughout the term or may wary at the rate you agreed on in the beginning.


4. Mortality Charges

The mortality charges are associated with the insurance component of your ULIP plan. These charges are deducted from your account every month and are based upon certain factors like

  • Your age

  • Your health status

  • The total amount of coverage

Your policy paperwork will have the method of calculating the mortality charges.


5. Surrender Charges

These charges are applicable during the encashment of the ULIP plan (either partial or full) before its maturity date. The IRDAI(Insurance Regulatory and Development Authority) has imposed the maximum surrender charges that insurance companies can charge.

The surrender charges are mainly dependent on when you decide to discontinue your policy and how much premium you were paying. However, it cannot exceed INR 6000. It is noteworthy that once the lock-in period for your plan is over, no surrender charges are applicable.

To Conclude

To enjoy the utmost ULIP benefits, you will have to make sure that you are  aware of the applicable charges. Choose an insurance provider that guarantees transparency so that you know what you are paying for and how your funds are utilized.


You are assured transparency and a financially secured future with Bajaj ULIP plans at Bajaj Markets. Also, you can benefit from features like high returns, tax benefits, and flexibility. So, apply for ULIP plans at Bajaj Markets, right away!


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